Federal Judge Rejects Challenge to HHS OIG Kickback Advisory Opinion
A federal judge in Virginia has rejected a challenge from the Pharmaceutical Coalition for Patient Access (PCPA) to a negative advisory opinion issued by the U.S. Department of Health and Human Services Office of Inspector General (“HHS OIG”) that found that PCPA’s proposed patient-assistance program would run afoul of the Anti-Kickback Statute (“AKS”). The decision comes after a federal appeals court in New York rejected a similar challenge to HHS OIG made by pharmaceutical giant Pfizer.
The PCPA case revolved around PCPA’s proposed program to provide financial assistance to financially-qualified Medicare Part D patients who use oncology drugs (Medicare Part D is the Medicare program that covers outpatient prescription drugs). PCPA’s proposed program would reduce the costs of these drugs by providing subsidies to patients paid for by the manufacturers of the drugs the patients needed. As the court explained: “In essence, [drug] manufacturers would subsidize the Part D [PCPA program] enrollees’ cost-sharing amounts for their own products, with PCPA as the middleman. But again, the manufacturers would do so only for their own drugs, not for the drugs of any other participating manufacturer.”
Before launching the program, PCPA sought guidance from HHS OIG as to whether the program would comply with the AKS, a federal law that prohibits knowingly offering or paying remuneration to induce an individual to purchase a federally reimbursable healthcare product. HHS OIG’s advisory opinion found that the proposed program would run afoul of the AKS, noting that the participating drug manufacturers’ payments to PCPA’s program would be “calculated to induce Part D enrollees to purchase their Part D oncology drugs.”
PCPA subsequently filed suit in federal court in Virginia arguing that HHS OIG’s advisory opinion violated the Administrative Procedures Act (“APA”). The court held that the advisory opinion did not violate the APA and rejected each of PCPA’s arguments to the contrary. In so doing, the Court held that: (1) HHS OIG correctly interpreted the AKS; (2) HHS OIG’s opinion did not treat PCPA’s proposal differently from similarly-situated parties; (3) HHS OIG’s opinion was not arbitrary and capricious because it differed from a previous 2005 HHS OIG report; and (4) HHS OIG’s advisory opinion did not infringe upon PCPA’s First Amendment speech rights.
PCPA’s challenge to HHS OIG in this case mirrors a similar challenge brought recently by pharmaceutical company Pfizer also challenging a HHS OIG advisory opinion finding that a proposed patient-assistance program would violate the AKS. Pfizer similarly lost its challenge, with the U.S. Court of Appeals for the Second Circuit finding that HHS OIG’s advisory opinion was not arbitrary and capricious (the Supreme Court subsequently declined to hear the case).
Click here to read the PCPA decision. Click here to read the Pfizer opinion.